How Tesla’s Chart Pattern Foretold a Deeper Price Decline
Elliott waves show up in widely traded individual stocks as well as the main indexes
by Bob Stokes
Updated: March 30, 2021
Tesla's stock price rose more than 2400% from June 2019 into January 2021.
A little factoid puts that into perspective: A few months before the top, the electric carmaker accounted for just 1.3% of the U.S. car market. Yet, in terms of market capitalization, it was priced as if it was the biggest automaker in the world.
By March 10, a prominent financial magazine said (Forbes):
Per our machine learning model, which analyzes five years of stock price data, Tesla stock has a strong chance of a rise over the next month after declining by -22% over the last five days.
On the same day, our March 10 U.S. Short Term Update showed this chart (wave labels available to subscribers) and said:
The pattern in Tesla argues for still-lower prices. The March EWFF showed a complete [Elliott wave] rally in the shares of Tesla from June 3, 2019 to January 25, 2021. The above chart shows that since the January high, the shares traced out [an Elliott wave] decline to 539.49, the low on March 5... This week's rally is a countertrend push...
The high in Tesla's stock price that day was $717.85.
By March 26, our U.S. Short Term Update showed this chart:
You'll notice that Tesla's share price did indeed continue to drop -- closing at around $618.
And, as of this writing on March 29, Tesla is again trading in the red.
Even so, some observers continue to express optimism. Here's a headline from March 22 (CNN Business):
Tesla's stock will rise 350% by 2025, analyst predicts
That analyst might turn out to be correct.
However, let's keep an eye on Tesla's unfolding Elliott wave chart pattern.
Learn how you can get the insights you need inside our flagship investor package -- which includes the thrice weekly U.S. Short Term Update -- by following the link below.
“For the First Time in U.S. History...
...[This Major Occurrence] Is Possible."
That's a heading in the recently published March Elliott Wave Theorist, which describes the "major occurrence" in full.
It's about more than an asset class -- yet make no mistake, if this "major occurrence" develops, some asset classes will undergo big changes.
Two charts that go back 270 years show why Robert Prechter takes this outcome seriously. The March issue also includes a section titled "Combining the Message from Waves and Cycles."
Indeed, read all of the Theorist so you can prepare. Just follow the link below to get started now.
The highly specific rules and guidelines of the Elliott wave model help you to establish high-confidence forecasts. See how a forecast for "a near 50% sell-off" worked out in this global financial market. Take a look at these two charts which depict an "Anatomy of a Bursting Bubble."
Triangles are one of the most reliable Elliott wave patterns of market psychology. You only see them in very specific parts of the trend. Watch our European Short Term Update editor explain triangle's implication for the next move in Russia's RTS stock index.
Investor psychology has moved back and forth between extreme optimism and extreme pessimism repeatedly throughout financial history. Here's analysis of a "model" which is an amalgamation of eight indicators -- and what it shows today.